A pivotal moment for China's economic reforms - Bo Xilai's trial

China's former Chongqing Municipality Communist Party Secretary Bo Xilai reacts during a meeting at the annual session of China's parliament, the National People's Congress, at the Great Hall of the People in Beijing, March 6, 2010.
REUTERS/Jason Lee

By Benjamin Kang Lim and Ben Blanchard| BEIJING

BEIJING When a court in a coastal province renders its verdict against disgraced Chinese leader Bo Xilai in a trial that appears imminent, it could also decide the pace of economic reforms planned by the new government of President Xi Jinping.

The ideological schisms exposed last year by Bo's extraordinary fall from power have, to a degree, hamstrung Xi, forcing him to move more slowly than he may have wanted on an ambitious programme to rebalance the world's second-largest economy, sources close to China's leadership told Reuters.

And they are at least part of the reason that political reform is not on the table now.

The tensions will persist long after the verdict, and may be exacerbated by the proceeding, the sources said.

Senior Communist Party officials worry that Bo's core constituency - conservative leftists as well as the economically dispossessed - will be inflamed by a harsh verdict: the death penalty or even life in prison.

The risk is that Bo's supporters could remain a brake on the reforms that favour private businesses and greater reliance on market forces.

"Bo Xilai still has many supporters and sympathisers in the party, the government and the military," said a party source, requesting anonymity due to the political sensitivity of the case.

Bo will almost certainly be convicted by the Intermediate People's Court in Jinan, capital of the eastern province of Shandong. He is charged with corruption, abuse of power and taking bribes - the country's biggest political scandal since the 1976 show trial of Mao Zedong's widow and her Gang of Four at the end of the Cultural Revolution.

Acquittals are unheard of in politically sensitive trials in China, where the Communist Party controls the courts.

For Xi, the Bo trial is a no win proposition. A relatively lenient sentence, should one come, would anger reform minded liberals.

"It will be difficult to please both factions regardless of how heavy or light the sentence is," the source with ties to the leadership said.

In a sign of just how deep the ideological rift runs, a recent commentary in state news agency Xinhua's online edition called for officials and party members to close ranks.

The commentary, published the day Bo was indicted last month, urged officials to "resolutely uphold the central (government's) decision, not to be afraid, shrink back or hesitate once the order (verdict) is out the door".

China's leaders want the trial done and soon, so they can move on and tackle bigger issues.

"They want to get this out of the way as quickly as possible so they can put it behind them and achieve a new measure of unity," said Zhang Lifan, a Beijing-based political commentator and historian.

PLENUM POLITICS

Xi needs the Bo affair settled now because the next few months are critical for the new government: at a closed-door party plenum in September or October, he will push for economic reforms, and he needs unstinting support from the Communist Party's elite 200-member Central Committee.

"Xi's top priorities are to continue growing the economy and maintaining stability," said another source with ties to the leadership.

Xi has no distinct political faction of his own, and is up against powerful interest groups in the party, government and military. Although he is stronger than his immediate predecessor, Hu Jintao, who ruled for 10 years in Jiang Zemin's shadow, Xi is still in the process of consolidating power.

"Xi is no Mao or Deng," a source close to both Xi and Bo said, referring to Chairman Mao and late paramount leader Deng Xiaoping.

"He does not have their authority. When Mao and Deng said it would be 'one', no one dared to say it should be 'two'."

The sense that Xi has yet to fully consolidate his clout was recently reinforced by the extraordinary release, on the Foreign Ministry's website, of public comments of support from former president Jiang.

In an apparent call for the party's 80 million members to back Xi, Jiang praised him as "a wise leader who can really get things done" during a dinner meeting with former U.S. Secretary of State Henry Kissinger in July.

Some analysts saw the rare public praise from Jiang - who still wields considerable political clout - as a signal in advance of the Bo trial that a divided party needed to unite.

LOST A POLITICAL GAME

There is unlikely to be any kind of open warfare in the Communist Party, where members are chosen and promoted on the basis of loyalty and ability to follow instructions from the centre.

Nevertheless, Bo's downfall has led to considerable disquiet in some quarters, not least because other top leaders are suspected of the kind of corruption he is accused of, yet no probes have been opened against them.

Left-leaning sympathisers are nostalgic for the idealistic early days of Communist rule, when there was a deeper feeling the party was "serving the people" rather than providing some sort of vehicle for get-rich-quick schemes.

After his appointment as Chongqing Communist Party boss in 2007, the charismatic Bo, a "princeling" son of a late vice premier, turned the southwestern metropolis into a showcase of Mao-inspired "red" culture as well as state-led economic growth. The leftists in the party flocked to his side.

"If Bo Xilai is so bad and the party really wants to fight corruption then why they have not gone after Wen Jiabao's family?" said one source with princeling connections, referring to a New York Times report last year which said the former premier's family had accumulated at least $2.7 billion in "hidden riches".

"Bo was seen to have done a lot of good things and many people think he got into trouble simply because he lost a political game, not because he was corrupt," the source added.

Bo has agreed to plead guilty to two of the three charges against him at his upcoming trial - corruption and bribe taking - in an apparent bid to earn a more lenient sentence and allow the party to close the door on the scandal.

But to highlight his conviction that he is a victim of a power struggle, Bo will deny the abuse of power charge, a source with ties to the leadership has said.

However, it is unclear if that deal still stands. A lawyer appointed to represent Bo said on Thursday he had been denied permission to act on Bo's behalf, a move likely to reinforce belief that Bo's conviction is a foregone conclusion.

Xi is trying to push through a series of major economic reforms, including opening up the banking sector to let in private players and interest rate reform. He would also like to introduce more competition in key industries which are now dominated by state-owned giants, such as in the energy and telecom sectors.

Leftists are deeply suspicious of private enterprise, believing it has led to the income inequality that plagues China today.

Xi has been mindful of Bo's constituency and has courted neo-leftists ahead of the trial - at the expense of reform-backing liberals.

In a January speech at the Central Party School, which trains rising officials, Xi said the second 30 years of Communist rule, when China reformed and opened up, should not be used to negate the first 30 years under Mao.

"Xi was not trying to resurrect Mao's historical legacy," an Asian diplomat told Reuters. "It was a political necessity." (Editing by Bill Powell and Raju Gopalakrishnan)

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